2/17/2010 @ 1:10PM

Abercrombie Tries To Ride Hollister To New Highs

Abercrombie & Fitch is betting its shirt that its Hollister brand will continue to grow overseas.

Retailer
Abercrombie & Fitch
said Tuesday that its fourth-quarter profit fell 32.1%, to 53 cents per share excluding one-time items. The teen apparel and accessories peddlers bottom line was dragged down by costs related to the closure of its Ruehl stores. Excluding Ruehl closing-related charges, Abercrombie earned 91 cents per share, topping analysts consensus call for a profit of 87 cents per share. Earlier this month the New Albany, Ohio-based store operator said net sales in January hit $222.8 million, up a whopping 16% from $191.5 million in January of 2009, thanks in part to post-holiday sales, with another boost coming from the use of gift cards. (See Christmas Comes Late For Abercrombie.)

Abercrombie has been working to expand its global footprint, and rightly so as domestic sales fell 12% last quarter while international sales surged 86%. Jefferies Konik noted that management provided extensive details around its international expansion, and that the number of new international Hollister stores will grow from nine last year to 30 this year, a highly productive and profitable driver of revenue, the analyst said. Shares of Abercrombie added 4.2% on Tuesday and were little changed Wednesday afternoon.

Elsewhere in retail, investors were keeping time with
Fossil
after the watchmaker beat fourth-quarter earnings expectations Tuesday on record sales and a 51% jump in net income. Fossil said Tuesday that strong wholesale shipments in its U.S. markets and worldwide direct-to-consumer sales helped it earn $70 million, or $1.03 per share, in the fourth quarter, a marked improvement from year-earlier profits of 69 cents per share, and ahead of analysts consensus call for a profit of 91 cents per share. Results were attributed to worldwide same-store sales growth of 12.1% on strength in the holiday shopping season, a sign that consumers are beginning to open their wallets as the economy slowly recovers from recession. (See Fossil’s Earnings: Right On Time.)

Konik noted that Fossil continues to drive sales through a well priced and innovative product assortment across a portfolio of brands including Relic, Abacus, Burberry, and Emporio Armani.

Wall Street initially showed support but as the clock ticked on, investor enthusiasm waned. Shares of Fossil ticked down 1.2% to trade at $36.15 at midday on Wednesday. Still, the Richardson, Texas-based maker of jewelry, leather goods and accessories offered better-than-expected guidance, partly on the belief that China, Korea and India will help fuel sales in the future.

In December Paramus, N.J.-based rival
Movado
posted lower-than-expected quarterly earnings as retailers kept tight reins on their inventory amid sluggish consumer demand for jewelry and accessories. The watchmaking company, which also peddles timepieces under the Concord, Tommy Hilfiger and Hugo Boss brands, among others, said it expects to return to growth this year. Movados shares fell dramatically in December, as low as $9.27, following the disappointing report, but have since climbed steadily since. At midday on Wednesday shares were down 1.6% to $11.97.

Coach
, which makes bags and also jewelry, watches and other accessories, saw its shares fall 0.6% to $35.97. Earlier this month a Goldman Sachs analyst cut the luxury retailers rating to “neutral” from “buy, and slashed her price target to $37 from $42, saying investors won’t want to pay a premium for the stock. In January Coach said its North American-based comparable same-store sales climbed 3.2% but the figure was at the low end of analysts forecasts.